Prince Lobel has secured a significant appellate victory for Boston University in a lawsuit against the designer of a major athletic facility on its campus. In Trustees of Boston University v. Clough, Harbour & Associates LLP, the Massachusetts Supreme Judicial Court ruled that BU’s express-contract indemnification claim against the designer is not subject to G.L. c. 260, § 2B, the six-year statute of repose governing “tort” claims in construction cases. In holding that an express indemnification claim is not subject to the tort statute of repose, even if the parties’ agreement uses tort language to dictate when indemnification will be required, the decision essentially overruled a recent Massachusetts Appeals Court decision in a different case, University of Massachusetts Building Authority v. Adams Plumbing & Heating 102 Mass. App. Ct. 1107 (2023) (UMass Decision).1
Boston University’s indemnification claim arose from design flaws in its New Balance Field athletic facility, which gradually rendered the field unusable for its intended purpose of hosting Division 1 field hockey games, requiring BU to take corrective action and incur major expenses. The claim seeks indemnification from the field’s designer, Clough, Harbour & Associates (CHA), based on a provision of the parties’ contract in which CHA promised to indemnify BU for any expenses incurred because of CHA’s negligence. At the outset of the case, CHA moved for summary judgment, arguing that (a) BU’s indemnification claim is effectively a tort claim because the contract term “negligence” is borrowed from tort law; (b) the statute of repose bars tort claims brought more than six years after the opening of a facility; and (c) BU’s claim was brought seven years after the opening of New Balance Field. The Superior Court denied the motion and the claim proceeded.
Soon thereafter, in the UMass Decision, the Appeals Court (Massachusetts’ intermediate appeals court) held that an express indemnification claim is barred by the tort statute of repose if the claim’s “gist” is the remediation of negligent construction work. The UMass Decision relied on case law from outside the indemnification context, and seemingly conflicted with an earlier SJC decision, Gomes v. Pan Am. Assocs., 406 Mass. 647 (1990), which held that the “gist” of an express indemnification claim was the enforcement of a contract – i.e., not a tort claim. Nevertheless, CHA renewed its summary judgment motion against Boston University, and this time the motion was granted.
On appeal, the SJC reversed the (second) summary judgment decision and restored Boston University’s indemnification claim. In the process, the SJC effectively negated any precedential effect of the UMass Decision, and reaffirmed its 1990 Gomes decision. Expanding on its reasoning in Gomes, the SJC distinguished express indemnification claims from implied warranty claims, which are subject to the tort statute of repose when their elements are no different than those of a negligence/tort claim. In an express indemnification case, the defendant’s liability is defined by the parties’ contract alone, requiring Boston University to establish not a tort claim, but rather a breach of contract claim – i.e., an enforceable contract; a breach of the contract; and, damages for which the contract provides. In such cases, the time to bring suit runs from the date of the contract breach – here, CHA’s failure to satisfy its indemnification obligation – not from the date the facility opened.
Using this reasoning, and quoting Gomes, the SJC ultimately found that “[t]he parties freely and intelligently entered into a contract of indemnification. They should be held to it.” The parties’ use of the term “negligence” as one of the indemnification-triggering events did not transform Boston University’s contract claim into a tort claim governed by the statute of repose.
The impact of the SJC’s decision is significant for those involved in the construction and real estate development sectors. After the Gomes decision in 1990, parties occasionally argued that Gomes only applied to “third party” indemnification situations; where, for instance, a plaintiff sued a contractor, and the contractor brought a third-party claim against a subcontractor. Until the UMass Decision, such arguments were unsuccessful. But now, with its Trustees of Boston University decision, the SJC has made clear that Gomes meant what it said (or at least strongly implied): an express indemnification claim will not be governed by the tort statute of repose, regardless of whether it is a first- or third-party claim, and regardless of the how the parties may have defined their indemnification rights and obligations.
If you have any questions about how this development may impact you, or about any other legal aspect of your construction or real estate development work, then please contact Michael T. Sullivan or the Construction Group at Prince Lobel Tye LLP.
[1] Read the SJC’s decision here.
